Which of the Following Are Correct Arguments Supporting Passive Investment

question 24

Multiple Choice

Which of the following are correct arguments supporting passive investment strategies?
I.Active trading strategies may not guarantee higher returns but guarantee higher costs
II.Passive investors can free ride on the activity of knowledge investors whose trades force prices to reflect currently available information
III.Passive investors are guaranteed to earn higher rates of return than active investors over sufficiently long time horizons

• A) I only
• B) I and II only
• C) II and III only
• D) I, II and III

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Definitions:

Personality Testing

The assessment of individual personality characteristics, typically through questionnaires or inventories, used for psychological, educational, and employment settings.

Null-Hypothesis

In statistical testing, a hypothesis that asserts there is no significant difference or effect, serving as the default position to be tested against an alternative hypothesis.

P-Value

A statistical measure that helps to determine the significance of results obtained from a hypothesis test, indicating the probability of observing the results by chance.

Significance Testing

A statistical procedure used to determine whether the observed outcomes of a study are due to chance or if they have statistical significance, often through p-values.